Hermès Soars as Rivals Struggle: Luxury Giant Defies Market Trends

In a market where many of its peers are struggling, Hermès, the French luxury house, has emerged as a standout performer. In the second quarter of 2023, the company reported a 9% increase in sales, reaching $4.4 billion (€3.9 billion) and outpacing analyst expectations.

At the heart of Hermès' success is the enduring appeal of its iconic Birkin and Kelly bags, which continue to draw wealthy collectors. The company's leather goods division saw a 12% organic growth in the first half of the year, with demand still far exceeding supply.

This strong performance has further cemented Hermès' position in the luxury world. Earlier this year, the company eclipsed LVMH to become the most valuable luxury group by market capitalization for the first time.

However, Hermès is not immune to the broader challenges facing the luxury market. Shares dipped 4% following the announcement, reflecting investor caution amid a decline in entry-level luxury. Sales in the company's silk and beauty departments also fell by 4%.

Despite these headwinds, Hermès has managed to maintain its momentum. In the United States, where the company raised prices this spring to offset rising tariffs, sales still jumped more than 12%. And in the Asia-Pacific region, sales rose moderately by 3%, even as luxury spending in China declined.

Looking ahead, Hermès' executive chairman, Axel Dumas, indicated that no further price hikes are planned for now. He also remains confident in China's long-term luxury potential, despite the current sluggish market.